That Selloff Left a Mark+Bill Ackman’s Soon to be Failed IPO

I have waited for this market to turn around long enough, and I have been putting off updating my YTD performance for a week too long now. Today, I’m going to talk about this major (or is it?) slip in the market, and then I am going to transition to Bill Ackman, one of the most prevalent Twitter warriors in the game today. We’re going to talk about how he is IPO-ing his hedge fund because he likes money.

First, let’s start off with this selloff. As someone who invests more aggressively than the S&P 500, let’s just say that I have felt this selloff. My TQQQ position has shed about 45% of its gain, which stung. This selloff is happening because it needed to. Since April 2020, big tech companies have been where you were supposed to put your money. Now, people are leaving big tech, and big companies in general, for smaller companies. Having your money in Google, Microsoft, or Apple was safer than having your money in the broader market, but now that has changed.

Right now, the markets are almost 100% sure that there will be a rate cut of some kind at the September meeting, so any investor who has parked their money in big tech for the last 3-4 years would see leaving for a different class of stock as the next logical step. As I have talked about before 1000 times, small-cap companies do better in low-rate environments, so investors will move into small-cap companies once they are 100% sure that a low-rate environment will be present.

Also worth mentioning is the AI turnaround. This has happened faster than I would have thought, but investors are already looking for profits from AI. Big tech companies are spending quite a bit on AI research, but relative to their cash flow, big tech is spending a reasonable amount. It is possible, however, that companies overpromise. ELON MUSK FOR EXAMPLE. On Wednesday, Elon pushed the robotaxis back even further AGAIN, causing the stock to slip 12%, a move that would become representative of perhaps a turning point in the market and in AI.

This is an immense rotation. I talk a lot about how the higher a company’s valuation, the smaller its tightrope, but tech, in general, has become extremely overvalued, as investors have flocked for safety. Alphabet’s 6/10 quarter has been labeled as a failure despite being the very definition of mediocre, with the one positive, for me at least, being their not too hot, not too cold AI spending.

The investing climate has changed, but your strategy has not. Nothing has changed about the companies you are in, just the warmth of the ceaseless garbage that CNBC spews.

Speaking of garbage, Bill Ackman. Bill Ackman, is widely known to be decent at his job, returning above average returns for Pershing Square Capital, his fund. However, his head is the size of New York at this point. The internet, or more accurately, corners of the internet, loveeeee Bill Ackman. As the Wall Street Journal put it, “grandiosity is a given with Ackman, a hedge-fund manager turned internet gadfly.” To capitalize on this love, Bill is making a public investment fund, think Berkshire. He was initially telling others that $25 billion was the amount of money he was expecting, but he has recently dropped that figure to $10 billion, a number insiders have said will be tough to reach.

But because that wasn’t enough, he is planning on taking his fund public, which is crazyyyyyy. Bill Ackman is not someone you should listen to. He knows what he is doing. He really is pretty good. Over the past five years, he has had a 31.2% annualized return; that’s excellent, and I am soooo jealous of his hair. Seriously, if I had white hair, that is the white hair I would want, at such a young age too. But investing in Bill Ackman’s public company is not what you want. When investing, you want predictability, low competition, and consistent returns. Ackman, and his style of investing, is neither predictable nor consistent, and there is more competition out there than you could handle. Hedge funds meltdown all the time, could you imagine how fast one could blow up if it was all happening in public? William Ackman is not worth the risk in the slightest.

Now, when I take Pax Romana Capital public and get it in the S&P 500 on Monday, you should disregard all of my previous advice.